Alaska Earned $11 Million in Pot Taxes This Year, $2 Million More Than Predicted

Ever since Alaska legalized recreational weed in 2014, the state’s legal cannabis industry has been making massive gains year after year. In the 2018 fiscal year, the Alaska Department of Revenue (DOR) collected over $11 million in cannabis sales tax revenue, exceeding the department's predictions by almost $2 million. This amount was also more than six times the amount that the state collected during the 2017 fiscal year, which came in at only $1.7 million.

In June — the last month of the state's 2018 fiscal year — the DOR raked in the largest amount of tax earnings yet, over $1.2 million. July's tax totals may even break this record, which puts the state's 2019 fiscal year off to a great start. “We absolutely are exceeding our predictions and additionally we are seeing a very steady increase in tax revenue collection each month,” said Kelly Mazzei, excise tax supervisor for the DOR, to NBC affiliate KTUU.

Mazzei believes that this growth is not over, and that sales will go even higher as the state's market matures. “I don’t believe the market has saturated and we haven’t seen exactly what capacity the state is going to operate in as far as cultivation and retail stores and the other facilities,” Mazzei said to KTUU. “So we could continue to collect an unknown amount of money in taxes.”

The state currently taxes cannabis buds and flower at $50 an ounce, while other parts of the plant are taxed at $15 an ounce. The DOR is considering a third tax rate of $25 an ounce that would apply to immature or abnormal plants. “We understand now with feedback that there is some lower quality bud, maybe some that’s failed a test result for mold so it could go to a product manufacturer, but it won’t go to a retail store,” Mazzei explained. “So therefore we don’t believe cultivators should be paying $50 an ounce if they’re not getting that price at market.”

Half of the tax revenue collected by the state goes to the “Recidivism Reduction Fund,” which helps pay for substance abuse treatment programs, community residential centers, and the Department of Public Safety's council on domestic violence and sexual assault. Governor Bill Walker just signed a new bill that will set aside another 25% of this revenue to fund cannabis reduction and awareness programs starting next year. Any remaining tax leftovers will remain in the state's general fund, to be used to fund other services as necessary.